Official Summary Text
SB 905, as amended, Becker.
Electrical corporations: nonbypassable charge.
Electricity.
(1) Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission) to administer the Electric Program Investment Charge Fund for research, development, and demonstration programs that will benefit electricity ratepayers.
This bill would require the Energy Commission, in consultation with the Public Utilities Commission (PUC), to develop and implement the Policy-Oriented and Wildfire Electric Reimbursement (POWER) Program to reduce the costs to ratepayers by providing reimbursement to electrical corporations and local publicly owned electric utilities for expenditures driven by public policy goals that provide a benefit to the general public, as provided. The bill would establish the
Policy-Oriented and Wildfire Electric Reimbursement Fund in the State Treasury and would require that moneys in the fund, upon appropriation by the Legislature, be expended by the Energy Commission for the purpose of the program. The bill would require the commission, when developing and implementing the POWER Program, to do specified things, including establish guidance and criteria for allocating reimbursements from the fund that require, among other things, that the proportion of any expenditures by an electrical corporation that are reimbursed pursuant to the POWER Program are excluded from the electrical corporation’s rate base and any asset funded by those reimbursed expenditures be funded without a return on equity, as provided. The bill would require the Energy Commission to annually report to the Legislature actual utility bill impacts in order to ensure the POWER Program is helping to reduce electricity costs for ratepayers. The bill would prohibit the Energy Commission from using more than 3% of
the moneys appropriated for the program or $5,000,000, whichever is less, for administrative and overhead costs each year.
(2) Existing law vests the PUC with regulatory authority over public utilities, including electrical corporations. Existing law authorizes the PUC to fix the rates and charges for public utilities and requires that those rates and charges be just and reasonable.
This bill would require the PUC, for each electrical corporation, to assign a reduced return on equity, as a reduction applied each year to the then current authorized rate of return on equity, for specified types of capital costs included in the electrical corporation’s rate base, as specified.
(3) Under existing law, it is the policy of the state that each electrical corporation continue to operate its electrical distribution grid in its service territory and to do so in a safe, reliable, efficient, and cost-effective manner.
This bill would require the PUC, on or before January 1, 2028, to initiate a proceeding to investigate, develop, and adopt a framework for performance-based metrics for large electrical corporations, as provided. The bill would authorize the PUC to establish targets for each of the performance metrics developed in the proceeding and to assess the performance of the electrical corporation against the performance metrics and any targets during a general rate case, as specified. The bill would require the PUC, on or before January 1, 2028, to require each large electrical
corporation to have an incentive compensation structure for certain employees for which a minimum of 20% of their total compensation each year is contingent on the average cost of electricity, as specified.
This bill would require the PUC to initiate a rulemaking proceeding to evaluate opportunities for alternative methods of financing capital investments in electrical distribution, electrical generation, and electrical transmission that reduce costs for ratepayers, as specified. As part of the rulemaking, the bill would require the PUC to require each electrical corporation to annually submit a report identifying all opportunities for alternative financing of electrical distribution, electrical generation, and electrical transmission costs. The bill would require the PUC, on or before December 31, 2028, to submit a report to the Legislature outlining any findings and recommendations resulting from the rulemaking.
This bill
would require the PUC to require each large electrical corporation to make data available to the public that quantifies the potential for increased utilization of segments of its electrical distribution grid by reducing peak load, as specified.
(4) Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because certain of the above provisions would be a part of the act, and because a violation of a PUC action implementing those provisions would be a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law requires each electrical corporation to identify a separate rate component that is required to be a nonbypassable element of the local distribution service. Existing law requires the Public Utilities Commission to allocate these funds for certain programs that enhance system reliability and provide in-state benefits.
This bill would make nonsubstantive changes to the latter requirement.